Student loan myth #01:
I'll just pay off the amount I borrowed and be done with it.
Student loan truth: If you live overseas it is almost certain that this will not be enough for the IRD. If you just pay off the original borrowings the IRD will still pursue you for any overdue arrears and they will still expect minimum annual payments. Before paying a large amount of money it is best to know where you stand so that you can make a plan and take advantage of available write-offs.
Student loan myth #02:
I've paid back my student loan, how do I get my penalties back from the IRD?
Student loan truth: The IRD uses the write-off of penalties as a tool to encourage compliance and payment. If you ask before you pay, a substantial write might is offered. If you ask after you have paid, the IRD has no incentive to offer a write off so the chances are much less.
Student loan myth #03:
I can't get this mess sorted before Christmas.
Student loan truth: If you start now (or very soon) there is a high chance that you could have your student loan problem sorted before Christmas which will allow you to breathe more easily.
Student loan myth #04:
I'll just pay the amount on my statement, or the total in MyIR, and be done with it.
Student loan truth: Several people this year have advised us that, after paying what they believed to be the final student loan debt balance, the IRD has come back and said there is more to pay. The cases we have seen have involved an extra $10,000-$30,000. Before paying what you believe to be the final balance of your debt always check this with the IRD and get it in writing. Even if the IRD adds an amount to your debt, your negotiating power is much greater before you pay than after.
Student loan myth #05:
Student loan bankruptcy relates to having debt. How much you earn relates to whether you might have to pay regular contributions while you are bankrupt. If you earn nothing you shouldn't have to pay contributions. Earning nothing won't stop you from becoming bankrupt.
Student loan myth #06:
I don't know what I owe and I'm scared to contact the IRD because then they'll know where to find me.
Student loan truth: The IRD can easily find you anyway, especially if you live in Australia. Dealing with the problem now will stop it from growing and will also mean that you still have available to you options like bankruptcy that could be taken away in the future.
Student loan myth #07:
If you have studied full-time overseas, at a high enough level, you may be eligible for a write-off of some of your NZ student loan interest, regardless of who paid for the overseas study. The rules change frequently and you may need to deal with up to three different IRD student loan departments, but it is worth asking if it looks like you might qualify. Depending on when you studied, you may only need a letter from the tertiary institution, or you may also need an NZQA assessment. Please ask us if you need help